George Shultz and the Value of Trust

Watching the second impeachment proceedings against Donald Trump brought memories of those long gone days when Americans trusted their government and leaders respected institutions. Those were the days when the U.S. economy was unbeatable and the framework of stabilizing and development prompting international institutions built with the ashes of WWII reshaped international relations while triggering a wave of abundance never seen before on the planet.

Today an alarming trend of declining competitiveness, mistrust of institutions and sauf-qui-peut attitudes seems to be undermining world order and economic development.

Almost as if on cue, one of the central characters of America's transformative leadership passed away a few days ago. Few were those that could compete with George P. Shultz in government leadership. He served as Secretary of Labor, Head of the Office of Management and Budget, Secretary of the Treasury and Secretary of State.

Few had the intimate knowledge he amassed on America's number one rival: the Soviet Union. But even fewer were as respected and trusted by the Soviet leadership as George P. Shultz. And it was that trust that led them to seek U.S. support when facing economic collapse.

Key to this peaceful transformation was Shultz's ability to build trust. In his words " ....there is one lesson I learned early and then relearned over and over: Trust is the coin of the realm . When trust was in the room, whatever room that was -- the family room, the school room, the office room, the government room or the military room -- good things happened. When trust was not in the room, good things did not happen . Everything else is details."

It took Shultz three years and 30 meetings with Soviet Foreign Minister Shevardnadze to build that trust.

It is thus sad and concerning to live through this trend of declining trust in the world. As measured by the Edelman Trust Barometer, from 2016 to 2017, the United States went from a 68% degree of trust in its institutions by its citizens to a 45% degree of trust. This has been the largest year-on-year reduction of trust in any one country in the two decades of existence of the Trust Barometer. And as trust declines, so does productivity, institutional development and social enrichment.

The Harvard Business Review went into the depths of the contribution of trust to economic growth and business development. It concluded that failed states are directly tied to the unraveling of societal trust. Meanwhile, leading companies at the New York Stock exchange have high trust ratings from employees and customers.

Bruce Cannon Gibney pinpoints the start of this calamity to the ascent of baby boomers to institutional helms. According Gibney's well-researched analysis, while the preceding generation had to endure life threatening sacrifices to defend democracy and freedom, baby boomers were cuddled by decades of peace and stability. While their parents understood the value of saving to build a stable personal life and an economy, baby boomers indulged in credit. And while their grandparents and parents never saw a company jump from a garage to the stock exchange, baby boomers had trouble understanding why it had taken Exxon, GM or GE several decades to become the leaders of the Standard and Poors index. In his best selling book "A Generation of Sociopaths: How the Baby Boomers Betrayed America," Gibney indicates "by refusing to make the most basic (and fairly minimal) sacrifices to manage infrastructure, address climate change and provide decent education and healthcare, the boomers have bequeathed their children an unraveling nation. And while not all Boomers directly participated, almost all benefited; they are, as the law would have it, jointly and severally liable."

Redressing the current predicament will most probably take a generation, although Shultz was more optimistic. Before his passing, Shultz shared with Mikhail Gorbachev the honor of naming the peace-making award for Voices of Youth.

In congratulating the awardee Ms. Kehkashan Basu, a youth activist, he confided to one of the organizers. "This generation best understands the value of freedom. They stand ready to protect freedom through activism, non-consumerism and sharing. Great things will come from them." These of course are the Millennials.